The Internal Revenue Service (“IRS”) has released Notice 746 which provides information about penalties and interest, and lists the latest interest rates. According to the notice interest rates will go down one percentage point in January.

Not surprisingly the IRS generally pays 1% less on money it owes to taxpayers (overpayments) then it expects taxpayers to pay to it (underpayments). Interest is compounded daily, and is in addition to penalties. The interest rates on underpayments and overpayments are as follows: